Matt Blumberg’s new book, Startup CEO: A Field Guide to Scaling Up Your Business, is about to come out. If you are a CEO and haven’t preordered it, I recommend you go get it right now.
I had a chat with a CEO I work with who has had a challenging year scaling up his company. He – and the company – have made a lot of progress after hitting a low point this spring. After the call, he sent me the following note he has pasted on his desk.
1. Lead by example by holding myself and all accountable, no matter how hard.
2. Set the overall vision and strategy of the company and communicate it to all stakeholders.
3. Recruit, hire, and retain the very best talent and inspire them.
4. Makes sure there is always enough cash in the bank.
5. Be the advocate for the customer over the company’s short-term needs.
6. Drive the execution and evolve the operating system.
7. Champion the company and our mission to the world.
You might recognize #2, 3, and 4 from Fred Wilson’s magnificent post What A CEO Does. I give a talk for many of the Techstars CEOs called “How to be a Great CEO” and I focus the conversation around Fred’s points. Matt’s book also uses Fred’s three points as a framework. And when I think about how a CEO is doing, I always start with 2, 3, and 4.
I’ve come to believe that you can’t be a great CEO if you don’t do these three things. But, great CEOs do many more than just these three things. So – I view them as “price of admission” – if you can’t / aren’t doing these three things, you won’t be a great CEO.
I always encourage the CEOs I talk with to create a clear framework for what they are doing. What you are doing, and spending time on, will change over time based on the stage of your company. When you are 10 people, you’ll have a different set of priorities then when you are 100, or a 1,000 people. But having a clear framework for what you, and how you do it, is powerful.
I love what this CEO has done to make Fred’s framework his own. Notice that each sentence starts out with the imperative form of an action verb (Amy told me that – doesn’t it sound smart!) – basically a statement of action. Lead, set, recruit, make, be, drive, champion. Great words.
If you break it down, it also defines a value set for the CEO, and for the company.
Finally, you are going to hear a lot more from me about the Company Operation System (what you see in #6). That’s the essence of what Matt Blumberg has figured out in scaling up Return Path, and uses to define his approach to scaling a business in Startup CEO: A Field Guide to Scaling Up Your Business.
My experience with all of this is that it’s incredibly hard, breaks regularly at different points in the life of a company, and requires a great CEO to continually grow and learn from mistakes, adjust course based on new information, and work diligently at being honest with himself, his team, and his board about what is going on. But, if you get it right, it’s magical.
Following is a guest post from Chris Moody. Chris is president and COO of Gnip, one of the silent killers in our portfolio. Once the main stream tech press starts noticing Gnip, they will be blown away at how big they got in such a short period of time by just executing. Chris is a huge part of this – he joined Gnip when they were 10 people and has been instrumental in working with Jud Valeski, Gnip’s founder and CEO, to build a mind blowing team, business, and market leadership position.
Following is a great email Chris sent me Friday night in advance of the Foundry Group “Scaling Your Company Conference” which we are having this week for CEOs of companies we are investors in that are on the path from 50 to 500 people.
Startups that experience success are typically built upon a strong foundation of trust among the early founders/employees. This trust has been solidified through long days/nights in small offices working on hard problems together. The amazing thing is that the founders don’t always realize that their company is even operating under an umbrella of trust or that trust is one of their core values. Instead, they just know that it feels easy to make decisions and to get shit done.
When companies try to scale, one of the biggest mistakes they make is trying to replace trust with process. This is rarely a conscious decision, it just feels necessary to add new rules in order to grow. After all, there are a lot of new people coming into the company and it isn’t clear who of the new people can be trusted yet.
A startup obviously needs to add process in order to scale, but if you replace trust with process, you’ll rip the heart right out of your company. When adding processes, ask yourself the following questions:
- Does this new process help us go faster?
- Does this new process help us be more efficient?
If the answer to these questions is “yes” you are off to a great start.
Now ask yourself “Are we adding this process because we don’t trust people to make decisions?” If the answer to this question even has a hint of “maybe” you need to stop and really consider the cost of that process.
Replacing trust with process is like a cancer that will spread quickly and silently throughout the company. One day you’ll wake up and think “this place doesn’t feel special any more” or ask yourself “why is it so hard for us to get stuff done.”
Trust could be one of your most valuable company assets. As a leader, you need to fight like hell to protect it. If you are successful protecting trust, you’ll actually grow much faster and you’ll still have a place where people love working.
I’ve seen trust work at a 700 person company. Trust can scale.